What are the best ways to track inventory performance?

Implement regular cycle counting instead of relying solely on periodic full physical inventories. This approach allows you to continuously monitor inventory accuracy and make adjustments as needed. Also, invest in inventory management software that offers real-time visibility into inventory levels, demand forecasting, and reporting capabilities. These tools automate many tracking tasks.

Key for Effective Inventory Management System: 1. Set the rules to follow. 2. Keep inventory low so that problems can come on surface. 3. Define the inventory norms based on stretagy and budget. 4. Follow, review and update inventory norms - Monitor actual vs norms. 5. Tight watch and alert on Top items (in terms of value contribution). 6. Review and conclude inventory levels based on supply visibility - publish coverage. 7. Review inventory projections for longer horizon - will help for effective control and give better visibility. 8. Implement effective and accurate inventory and materials management systems and. procedures. 9. Be organisation centric. 10. Create awareness and make stake holders responsible - It's team effort.

I disagree on the point that low inventory turnover indicated lower inventory performance. Agriculture commodities are seasonal. Companies dealing with agriculture commodities would need to procure their annual requirement in bulk during the season and sell around the year. These companies will tend to have low inventory turnover and high inventory cost which will be passed on to their customers. Procuring the commodities in bulk during season and having higher inventory is a business requirements for these firms.

I will consider Inventory accuracy as the most important metrics to track inventory performance. Key decisions are taken by managers based on inventory data from ERP. Let me narrate a real life incident from my professional life: Decisions on offering steep discounts are taken by senior management based on inventory data. We had an item in our ERP whose inventory was inflated due to an accounting error. The item was one of the highest value slow moving inventory and decision was taken to offer steep discounts to sell off the item. Large contracts were booked at discounted prices with our key customers. Once the sales process started we realized the inventory deviation and had to procure this item to keep our commitment with the customers.

Inventory accuracy is the primary metric of successful inventory management. Accurate inventory tracking is the direct result of disciplined receiving, storage and shipping procedures supported by a robust cycle counting process. Once you have accurate inventory tracking, purchasing and production plans are simplified and increase in effectiveness.

Inventory accuracy can be improved by focus on 3 essential elements and actions of warehouse management 1. Accurately counting and capturing the goods quantity in the system when stocks are received 2. Proper stock management - Ensuring no pilferage or loss of goods when goods are stored in a warehouse. 3. Accurate outbound and physical dispatch of goods captured correctly in the system and reconciled with balance stock in the warehouse.

Inventory Accuracy is the price KRA (Key Responsible Area) of a warehouse manager, he keep an eye on inventory hygiene every time. Stock take needs to be done on regular basis as per industry. Be focused while receiving the goods, as per my experience most of the errors are done during uploading the goods in the system/software. Use and Track your RGP/NRGP during sending the articles out of the warehouse. Always use resources provided by the company to prevent shrinkage and pilferage eg. CCTV, Security Guards, soft/hard tags (which is being used in retails sector), Frisking is being done without fail, etc. A good warehouse manager knows all the tools to find out the missing article as per industry.

It is also equally important to reconcile the company fill rates with customer fill rates. Many times there is gap between service levels measured by the organization versus the customers. Organization may be measuring the fill rates at SKU quantity level whereas customers measure fill rates are order SKU quantity level which will be at significantly lower level vs the Quantity fill rates. It is important that service levels have same perception between organization and the customers.

High volume inventory has bigger impact on warehouse storage cost and high value inventory has bigger impact on opportunity cost.